Comcast’s
deal to acquire NBC from GE announced yesterday doesn’t break a whole lot
of new ground from a deal structuring point of view. In general, GE contributes its NBC/Universal
assets to the joint venture. For its
parts, Comcast pitches in cash plus cable assts like the E! Network and the Golf Channel (which suddenly have
many more synergies than they used to). Where
this deal is likely to get interesting, though, is on the regulatory approval
front.

As I noted
in a post a couple of months ago, in media deals, the FCC also has an independent premerger
approval process of its own. Although the FCC
rarely stops deals from proceeding, it has a much broader charge than the FTC. The HSR process is focused on assessing the
potential anti-competitive effects of a proposed merger. The FCC’s charge is to assess the proposed
transaction on the basis of a “public interest” analysis. In assessing whether
the Comcast/NBC deal is in the public interest, the FCC will determine whether the transaction will
media diversity (“the
widest possible dissemination of information from diverse and antagonistic
sources is essential to the welfare of the public.” Turner
Broadcasting System, Inc. v. FCC), the quality of local services and
the provision of new services, promote competition, and localism among others. That’s a lot of ground to cover. I’m sure Comcast’s
legal counsel have been studying the FCC’s
2003 order in the GM/Hughes and News Corp merger for hints how this review
is going to go. The structure of the
transaction there was similar to this one.
Although the vertical integration in the NewsCorp/Hughes transaction was up the chain and not down,
the arguments and the public interest analysis done there should look familiar
to people. This process, because it’s
done on a case-by-case basis and because it’s not nearly has common as the HSR
process, could take some time to accomplish.

Third,
there’s Congress. Although Congress
doesn’t have a premerger approval process, every cable TV subscriber has a
Congressman and they must be heard. That
fact no doubt generates what the Supreme Court has called “an independent
interest in preserving a multiplicity of broadcasters.” Henry Waxman, Chairman
of the House Committee on Energy and Commerce, released the following statement:

The proposed Comcast-NBC Universal joint venture
agreement has the potential to reshape the media marketplace. This
proposal raises questions regarding diversity, competition, and the future of
the production and distribution of video content across broadcasting, cable,
online, and mobile platforms. It is imperative that the FCC, the Justice
Department, and the FTC rigorously assess whether this transaction is in the
public interest.

I will work with Rep. Rick Boucher, Chairman of the
Subcommittee on Communications, Technology, and the Internet, to schedule
hearings on this matter at the earliest practicable date.

So, there will hearings in which assorted Congressmen ask questions and
give their point of view on the usefulness of a Comcast/NBC link-up. That ought to be fun.

This acquisition will create waves throughout the media and entertainment marketplace and we don't know where the ripples will end. Antitrust regulators must ensure that all content providers are treated fairly on the Comcast platform, and that Comcast does not get undue advantages in gaining access to programming. We plan a public hearing so that consumers can get a better sense of how this deal could affect their access to diverse programming and information, especially as they more often look to the internet for such services. It's critical that we preserve robust competition and promote innovative and emerging program delivery in this rapidly changing market.